South Africa’s Economy Enters Recession

South Africa economy contracted by 0.7 percent in the second quarter, plunging the country into its first recession in almost a decade.

This was according to data released on Tuesday by the country’s Statistician-General, Risenga Maluleke.

“We are in a recession. We reported a contraction in the first quarter … and now in the second quarter with a fall of 0.7 percent,” Maluleke said.

This is the first time Africa’s second largest economy is entering into recession since 2009.

According to statistics, the contraction was led by declines in the agricultural, transport and retail sectors, despite predictions that the economy would grow 0.6 percent in the latest quarter.

Agricultural output fell 29.2 percent in the second quarter, while the transport, communication and storage sector fell 4.9 percent.

According to Bloomberg, the country’s currency rand weakened as much as 2.6 percent against the U.S dollar and was 2.3 percent down at 15.2088 per dollar by 2:03 p.m. in Johannesburg.

Yields on rand-denominated government bonds due December 2026 rose 18 basis points to 9.18 percent, the highest level since before President Cyril Ramaphosa became leader of the ruling African National Congress.

The news is a setback to the new president, whose has only been in power for six months.

“This economy remains in the doldrums, that we are in desperate need for policy certainty and structural reform to get us onto a growth path,” Elize Kruger, an economist at Paarl, South Africa-based NKC African Economics, told Bloomberg.

“This type of environment is difficult for job creation. We’ll get stuck in our low-growth term if we can’t get out of this.”